Brother at wheel in accident, recovers $18 million

by Walter Olson on March 14, 2014

Pennsylvania: “According to police, Kyle Piper, then 17, lost control of his car on a wet Route 422 in Union Township and struck a steel pole.” His 15-year-old brother Stephen, a passenger, was catastrophically injured. “At the time of the accident, according to court documents, the family was insured through Erie Insurance Exchange and believed $200,000 in uninsured motorist benefits and another $100,000 in liability coverage was available for Stephen.” Several legal twists later, Erie has agreed to pay $18 million. [New Castle (Pa.) News]

{ 11 comments }

1 James 03.14.14 at 9:27 am

“Legal twists” kind of obscures how the only reason the insurance company is paying more than the policy limits is because it refused to defend the driver and breached the contract. If they had paid the policy limit when the verdict came in, they wouldn’t be in this position.

2 John Rohan 03.14.14 at 1:00 pm

Over 7 million for the attorneys? It’s clear who the real winners are here.

3 Turk 03.14.14 at 1:30 pm

Let’s see if I understand this correctly:

Driver was insured.
Driver was negligent.
Passenger was badly injured.
Ins. Co. breaches agreement to honor the policy and acts in bad faith.
Ins Co. sued for bad faith and, belatedly recognizing it screwed up, throws in the towel and settles.

Hopefully the insurance company learned its lesson and won’t try to screw others. But I wouldn’t bet on it.

4 Bill Poser 03.14.14 at 4:42 pm

Agreed that the insurance company is paying for its breach in failing to defend the driver. However, I wonder what exactly it is obligated to do. Suppose that the evidence is crystal clear: the defendant was the driver, he was reckless, the injuries to the brother are due to the accident. What’s to defend? Is the insurance company obligated to do more than provide a lawyer to advise the defendant on a settlement? Must they provide a lawyer to sit through a trial with no realistic defense strategy?

5 Turk 03.14.14 at 10:57 pm

Bill:

They have a duty to defend. It’s part of the contract if this is an insured driver.

And if the case is indefensible they had an obligation to tender the insurance policy. They obviously didn’t, hence the bad faith.

But even in the worst cases, there will always be a question as to “how much.” If defense counsel is there then the rehab and economic experts can be challenged to make sure numbers aren’t inflated.

6 William Nuesslein 03.15.14 at 8:16 am

I trust that Turk commented in good faith, but his point escapes me. This is a case where any reed would be used to finance the lifetime of expensive care required for the brother. The problem with this seemingly humane conduct is that there is an obscene courtroom lottery to provide excellent care for some, with tons of money going to lawyers, while others in similar duress are cared for by state institutions.

7 Turk 03.15.14 at 6:22 pm

You can’t really complain about a courtroom lottery when the insurance company made the decision to not send in counsel because they figured they could screw the victim.

And my point, which I thought I made clear, was that there is always something to defend: liability, or causation or damages.

Of course, if it is the system itself you wish to complain about, we can just have the taxpayers pick up the tab as we give the tortfeasors immunity. Personally, I’m not big on that kind of socialism and believe in personal responsibility. Your mileage may vary.

8 HFB 03.16.14 at 10:02 am

If I understand correctly, the FAMILY was insured through Erie…

To have access to the uninsured motorist portion would mean that Kyle was uninsured….Right? If that is the center of the dispute then there may be some validity to either side: Kyle was insured so the uninsured motorist portion does not kick in and the family is wrong; Kyle was not insured and Erie should have paid up. It appears to be the latter.

It sounds like a “trial” was conducted because Erie contested the former (?) to come up with a large number for care out of thin air…the article glosses over it with:
“Following years of legal wranglings on the consolidated bad faith cases and various suits and countersuits, all parties agreed to mediation.”
This reminds me of my favorite comedian Brian Regan and his “one thing led to another” bit. How did we get from there to here???

I’d be interested to see if Kyle even defended himself or if he helped to come up with a great verdict. No info on that but it seems like a good ploy: “What, they’re contesting it? Let’s go to trial now and come up with a great verdict so we can exceed (far exceed) policy limits due to bad faith.” Worst case, he has a verdict against him that his P’s never attempt to enforce and best case is, well, we see that here.

Again, I could be entirely wrong depending on what the insurance docs said and laws in the state required, but it just doesn’t make sense that Erie has to automatically pay up what the family “believes” to be the right amount. If Kyle wasn’t insured then why would they be required to represent him and Erie should pay the uninsured coverage ONLY. If he was, they would not be entitled to the uninsured portion and Erie should have paid the insured coverage…and defended him at trial. Am I right?

Something’s weird and I would be curious if there is more than we are seeing here…”Refused to settle” could mean that they disagreed with the Family’s argument in some way and I’m not sure how they get to not defending their client which seems the big error.

I’m not sure where commenters found that Erie realized its mistake and paid up ‘cause it sounds like they just made the decision to settle and the mediator was following the verdict.

9 HFB 03.16.14 at 10:25 am

Actually, the more I think about it:
If Kyle was an uninsured motorist yet Stephen was covered under the family’s auto insurance policy, why would Erie owe anything? Does YOUR auto insurance cover you when you are a PASSENGER? Or, walking down the street? Or, a passenger in another vehicle? I have not checked my docs but thought it was liability for when I was the driver ONLY and that my health insurance would cover the injury and go after the driver or their insurance company if it was their fault. So, I could see me crashing, making a claim and my health ins. co. going after my auto ins. co. if that makes sense…

In this case, Kyle’s uninsured, they go after Kyle thinking that they have some coverage on their AUTO policy, they don’t so Erie refuses to settle or defend for either boy as they have no duty to either claim.

I’m outta my league but I don’t mind commenting or posing the question and would be interested what really is required.

10 William Nuesslein 03.16.14 at 10:49 am

I was wrong in believing that Tuck’s first comment was in good faith.His nasty insinuation against insurance companies belies his objectivity. The phenomenon that I referred to played out many times in birth defect cases. The jury finds against the doctor to get care for a child. Otherwise the child would be in a state institution. What about the kids who are in the institutions? We can get more care to more deserving children through litigation because the lawyer fees would be avoided.

11 Turk 03.17.14 at 10:34 am

I was wrong in believing that Tuck’s first comment was in good faith.His nasty insinuation against insurance companies belies his objectivity.

Well, the article says that Erie is going to pony up $18M, and the insurance policy (or policies, it isn’t clear) had a max exposure 300K. So I think it’s fair to assume that litigation discovery probably turned up some mighty powerful evidence of bath faith by Erie in this case.

I do my best to form opinions on based on the evidence presented. Once again, the mileage of others may vary as they elect to form opinions based upon politics.

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